Iraq
Introduction
Australia and Iraq enjoy a warm and increasingly diverse relationship. Australia is a significant development assistance donor to Iraq and both countries are working towards re-building the trade relationship. Australia and Iraq are represented bilaterally through Embassies in Baghdad and Canberra, respectively.
Political overview
Iraq is a federal constitutional democracy. The Head of State is the President (Jalal Talabani), who with the two Vice Presidents (Adil Abd al-Mahdi and Tariq al‑Hashimi) forms the Presidency Council. The Head of Government is the Prime Minister (Nouri al-Maliki), who is drawn, along with the Cabinet Ministers, from the Council of Representatives. The Council of Representatives has primary responsibility for drafting legislation.
There are 18 provinces in Iraq, including three provinces under the control of the Kurdish Regional Government (the KRG), an autonomous regional government recognised by the Iraqi Constitution. The status of the disputed area of Kirkuk is yet to be resolved.
The formation of a democratic government in Iraq followed the overthrow in 2003 of the regime of Saddam Hussein, by a United States-led coalition of forces, including Australia. After Saddam's fall, the coalition established a Coalition Provisional Authority (CPA), which set about creating a new Iraqi constitution and a process for elections. The CPA was disbanded on 28 June 2004, with sovereign authority for governing Iraq transferred to the Iraqi Interim Government. Based on the timetable laid out in the Transitional Administrative Law, the interim Government governed Iraq until elections were held on 30 January 2005; thereafter the Iraqi Transitional Government assumed authority.
In May 2005, the Iraqi Transitional Government appointed a multi-ethnic committee to draft a new Iraqi Constitution. The new constitution was finalised in September 2005, and was ratified in a nationwide referendum on 15 October 2005. On 15 December 2005, Iraqis again went to the polls to participate in the first legislative elections as outlined by the new constitution.
In the December 2005 national elections, the Iraqi people elected the 275-member Council of Representatives (CoR). The new four-year, constitutionally-based government took office in March 2006, and the new cabinet led by Prime Minister al-Maliki was approved and installed in May 2006. National elections are due to be held again in January 2010.
Following the overthrow of Saddam Hussein, Iraq witnessed widespread violence by insurgent groups along sectarian lines, and against the coalition forces. Following a peak in the level of violence in 2006/2007, the security situation improved slowly due to a combination of ongoing political progress, and the increased capability of the Iraqi Security Forces, working closely with a surge in coalition forces, in combating the insurgency. These successes allowed coalition forces to progressively transfer primary security responsibility to the Iraqi Security Forces.
The United Nations Security Council Resolution 1790 mandating the presence of multinational forces in Iraq expired on the 31 December 2008. With the expiry of the mandate, the Government of Iraq assumed full responsibility and sovereignty over the country, with remaining foreign troops being present in Iraq only with the agreement of the country's democratically elected government.
Since January 2008, the Council of Representatives (CoR) has passed several significant pieces of legislation, which have helped strengthen and bolster political, social and economic reconstruction. These include, the Accountability and Justice Law (de-Baathification Law), which allows for mid and low-level former Baath party members to re-enter government roles and to receive government pensions, the Provincial Powers and Provincial Elections Laws which set out the authority of local governments relative to the national government and elections - provincial elections were held in Iraq on 31 January 2009 and regional elections for the Kurdistan Regional Government were held on 25 July, both successfully. Other important acts passed include the Amnesty Law, that allows the release of detainees held for extended periods of time without trial, and the 2009 Budget.
Together these laws mark significant political progress for Iraq. However a number of controversial issues remain unresolved by the Council of Representatives including proposed legislation to provide a framework for foreign investment in the oil and gas sector, and define a process for the distribution of oil revenue. The status of Kirkuk also remains a sensitive issue. The security situation in Iraq remains very difficult and the Australian Government continues to advise Australians not to travel to Iraq - see travel advice for Iraq.
Economic Overview
Following years of conflict and economic sanctions, the Iraqi economy is improving slowly. Key challenges for the Iraqi Government remain, including further increasing oil production and improving service delivery (especially water and electricity).
In August 2009 the IMF projected growth to continue at about 6.9% in 2009 and 6.7% in 2010. In 2009, year-on-year inflation was 13.8%, compared to 30.8% in 2007. The Iraqi Dinar has replaced the US dollar as the main currency, and a functioning banking system and stock exchange now operate.
Oil is critical to the Iraqi economy as it accounts for more than two-thirds of Iraq's GDP and almost all of Iraqi export revenue. Positive improvements have been seen in this sector with oil production in 2008 and 2009 consistently above the Iraqi Government's target of 2.2 million barrels per day (mbpd), but this figure is still below long-term expectations. Fluctuating world oil prices present particular challenges for the Iraqi economy and the national budget.
For more information on the Iraqi economy, please see our fact sheet.
Bilateral relationship
Australia has had diplomatic relations with Iraq in various forms since 1935. Australia opened an Embassy in Baghdad in 1976; Iraq established an Embassy in Canberra in 1995. After the closure of the Australian Embassy in Baghdad in 1991, and the closure of the Iraqi Embassy in Canberra in 2003, full diplomatic relations resumed when the Embassies reopened in 2004 following the transfer of authority from the Coalition Provisional Authority (CPA) to the Iraqi Interim Government.
In June 2008, the Australian Government, in close consultation with the Iraqi Government withdrew Australia's combat troops from Overwatch Battle Group-West in Iraq. Further naval and air elements were redeployed in December 2008, and following the withdrawal of personnel embedded in coalition headquarters, the Australian Defence Force’s Operation Catalyst concluded on 31 July 2009. A limited number of Australian personnel have remained, including two officers working with the United Nations Assistance Mission for Iraq; and approximately 100 personnel providing security and support to the Australian Embassy in Baghdad. For further information on the Australian Defence Force's contribution in Iraq see the Department of Defence.
The Australian Government's focus has increasingly been on funding humanitarian assistance and capacity building initiatives in Iraq - particularly in areas such as agriculture, public sector financial management, human rights, law and justice sectors and improving basic service delivery. To this end, the Government expanded its assistance to Iraq in the 2008-09 Budget, committing $165 million over three years. This funding includes a $13.9 million package of assistance over three years for the Australian Federal Police and $120 million over three years for development assistance to Iraq through AusAID. Additionally, in 2008-09 the Government allocated $20 million to address the immediate humanitarian needs of vulnerable Iraqis and $10 million to the Department of Immigration and Citizenship's Displaced Persons Program to assist Iraqis in neighbouring and transit countries settle with security, pending long-term resolution.
In addition, the Government has supported multilateral donor efforts in Iraq through providing $22 million to the World Bank Iraq Trust Fund and $40.8 million to the United Nations Development Group Iraqi Trust Fund. For further information on Australia's aid program in Iraq, see the Australian Agency for International Development (AusAID). Australia is also assisting Iraqi refugees through its immigration program. In 2008-09, the Government increased the size of its Humanitarian Program by 500 places, specifically for Iraqis.
In March 2009 Iraqi Prime Minister, Nouri Al-Maliki, visited Australia as a Guest of Government. As the first visit by an Iraqi Prime Minister to Australia, Prime Minister Al-Maliki’s visit was of historic importance and signalled a new phase in Australia and Iraq’s bilateral relationship. During the visit, Prime Minister Al-Maliki and Prime Minister Rudd signed a declaration agreeing to increase cooperation in six key areas and to enhance trade and investment ties. Memoranda of Understanding (MOUs) were developed on Agriculture; Resources and Energy; Trade Cooperation; Education, Training and Research; Public Health; and Security and Border Control. The MoUs provide the framework for strengthening Australia and Iraq’s bilateral relations. In his speech to a dinner in honour of Prime Minister Al-Maliki’s visit, Prime Minister Rudd said the visit was a symbol of all that Iraq had achieved in the face of great turmoil, and that Australia wanted to be a partner with Iraq in building its future.
Foreign Minister Stephen Smith and Trade Minister Simon Crean also met with their Iraqi counterparts, Mr Hoshyar Zebari and Dr Abdel Al-Sudani, who accompanied Prime Minister Al-Maliki on his visit to Australia. Mr Smith commented on the visit in an interview with the ABC.
Deputy Prime Minister Julia Gillard visited Baghdad on 27 June 2009 and signed the six MoUs with relevant Iraqi Ministers, in the presence of Prime Minister Al‑Maliki.
There is a sizeable Iraqi community in Australia, with more than 32 000 Australians born in Iraq recorded in the last Census. Iraqis were the single largest national group of entrants to Australian under Australia’s Humanitarian Program during the 2008-09 financial year.
Australia Iraq Bilateral Trade Relationship
Historically, Australia’s primary commercial interest in Iraq has been wheat, which has been exported to Iraq for over 50 years. Identified exports to Iraq in 2008 included cheese and curd; electrical machinery and parts; and lighting fixtures and fittings. There were also confidential items of trade totalling $143 million. Crude petroleum was the principal Australian import from Iraq, totalling $55 million in 2008.
The Australian and Iraqi Governments continue to work to broaden bilateral trade relations. In 2007, Iraq announced the opening of an Iraq Trade Liaison Office in Canberra and the appointment of a senior trade official to Australia. At the same time, Austrade continues to facilitate trade links between Australia and Iraq through its trade offices in Dubai and Amman. For further information on export opportunities in Iraq and the current trade environment see Austrade.
Australia is committed to building comprehensive bilateral ties with Iraq. Australia actively supported Iraq's successful bid for observer status in the World Trade Organisation and will continue to assist Iraq to engage with the global economy.
Updated: 11 August, 2009